It’s been a while between drinks, but NAB and AMP have the advisors back on the phones selling two new hybrid issues –Maximum Conversion Number) are important. They highlight the fact these products aren’t fixed interest securities (which put an obligation on issuers to pay interest and repay principal). The NAB CPS 2 are complicated quasi-equity securities with debt-like features and the AMP Sub Notes 2 are quasi-debt securities with equity-like features.
Where do you fit such securities into an investment portfolio? As they’re typically pitched to conservative income-focused investors, we’ll use our Conservative Portfolio as a case study.